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Domain name registrars ordered to pay nearly $2M over billing claims

Domain name registrars ordered to pay nearly $2M over billing claims

The ACCC alleged the companies engaged in misleading or deceptive conduct

The Federal Court of Australia has ordered domain registrars Domain Name Corp and Domain Name Agency a combined amount of $1.95 million in penalties after they sent out approximately 300,000 unsolicited notices to businesses.   

The Australian competition watchdog revealed in August last year it had taken action against the local domain name registrars, alleging that they engaged in misleading or deceptive conduct and made false or misleading representations to Australian businesses about the domain name services they offered.

The Australian Competition and Consumer Commission (ACCC) also alleged at the time that the sole director of both the domain companies was involved in the conduct.

According to the competition watchdog, from November 2015 to at least April last year, the domain companies sent out around 300,000 unsolicited notices to businesses, which the ACCC alleges looked like a renewal invoice for the business’s existing domain name.

Instead, these notices were for the registration of a new domain name, at a cost ranging from $249 to $275, the ACCC said.

“The ACCC alleges that because these notices looked like they were renewal invoices, many businesses paid them thinking they were simply renewing the domain name for their business,” ACCC deputy chair, Dr Michael Schaper, said at the time.

The ACCC said it believed that Australian businesses and organisations had paid approximately $2.3 million to the Domain Companies as a result of receiving the notices.

In a ruling handed down on 14 June, the Federal Court ordered that Domain Name Corp pay $1.5 million and Domain Name Agency pay $450,000 as a result of the conduct flagged by the ACCC.

Ultimately, the Court declared that the Domain Companies made false and misleading representations and engaged in misleading and deceptive conduct in sending the notices. 

The court also ordered an injunction restraining the two domain name registrars for three years from sending unsolicited notices containing an offer to register a domain name that is substantially similar to a domain name already held by the recipient, without including on the face of the notice the words: “This notice does not relate to the registration of your current domain name. This is not a bill. You are not required to pay any money”.

The court also ordered that the third respondent in the case, the director of the two companies, be disqualified from managing corporations for five years and that he pay the ACCC’s costs of the legal proceedings, fixed at $8,000.

“The Domain Companies misled businesses into thinking they were renewing payment for the business' existing domain name, when in fact the business was paying for a new domain name,” ACCC acting chair Delia Rickard said.

The ACCC previously claimed it received over 100 complaints in 2016 from small businesses that received similar letters to those cited in the case and paid them, not realising what they had paid for. 

Indeed, some mistakenly thought they were renewing their current domain name and risked missing the genuine renewal notice, the ACCC said in August last year.

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